Weinstein brothers launch new media firm

What's in a name? In Hollywood, a lot, and for brothers Harvey and Bob Weinstein, their name and reputation as savvy businessmen is the key to raising money and launching a new media concern.

The Weinsteins gained fame and wealth as co-chief executives of Miramax, home to Oscar-winning movies such as Chicago.

They would form a new company, tentatively called The Weinstein Co, they said. This came after unveiling plans this week to quit Miramax and parent Walt Disney by September 30.

Their strategy is expected to unfold in coming months, but two sources said they were looking to raise between US$300 million and US$500 million, initially, to release 15 to 20 movies in the next year.

Several experts said that while show business was crowded and notoriously cutthroat, the Weinsteins' ability to build their Miramax Films from nothing 25 years ago to a US$2 billion company should bolster investor confidence.

Challenging them will be the fact that their major success has been in marketing movies in the United States and Canada. They have little experience in cable TV, digital technologies they plan to exploit, or in international markets where, for the most part, they have sold distribution rights to their films.

As they build Weinstein Co by first focusing on movies, reinvigorating book publishing, then branching into cable television, the internet and other digital media, they hope to raise up to US$1 billion, though that may take years.

Harvey Weinstein seemed confident that raising cash would not be a major obstacle, saying the reaction among financiers has been "incredible excitement".

He named members of an advisory group that includes Steve Rattner of private equity firm Quadrangle Investments, James Dolan, chief executive of Cablevision Systems, and Dirk Ziff of Ziff Bros Investments, among others.

A source said Disney agreed to pay the Weinsteins roughly US$130 million in bonuses for 2004 and 2005 in the deal for them to exit Miramax - that would be available to them for production, development and marketing.

The Weinsteins should have no problem booking films into theatres, given their reputation for turning out hits.

Some Miramax employees will be given an option to either stay or join the new Weinstein Co.

Several sources said it would take at least two to three years before the company would begin to generate meaningful cash flows.

This is because films generally took years to develop but did not begin to see profits until video, DVD and TV revenues began to roll in.

- REUTERS